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MAT

Dhawal Mohnot (Practicing) (449 Points)

20 April 2010

During the current year the company has long term capital gain for a substantial amount. I understand that it is exempt u/s 10(38) and there wont be any MAT applicable for the same. Kindly Confirm.

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6 Replies

Amir (Learner) (4016 Points)
Replied 20 April 2010

Dear Dhawal,

For computing Book Profits under 115JB -

Income exempt u/s 10 has to be excluded except 10(38)...

Now this means though it is exempt but indirectly a company (liable to pay MAT) has to pay TAX on this beacuse it will remain included in the Book Profits...

Dhawal Mohnot (Practicing) (449 Points)
Replied 20 April 2010

Sir,

The Section says that Books profits for this purpose is to be increased by

" The amount or amounts of of expenditure relatable to any income to which Section 10(Other than provisions contained in clause 38 thereof) section 11 or 12 apply."

Can u please explain the catch here.

Amir (Learner) (4016 Points)
Replied 20 April 2010

Bhai,

The provision which you have mentioned i:e the one related to expenditure is just a harmonious or a consequential provision.

Since "Income u/s Sec 10 {OTHER THEN 10(38)} has been excluded so ANY EXPENDITURE in relation to that income cannot find its place in Book Profit and it has also to be excluded..

Eg - Dividend of Rs. 1,000 is lying at the credit of P/L A/c & expenditure in relation to that Rs. 50 is debited to P/L/ a/c

Now if u want to exclude this transaction then u have to exclude both the item I mean Rs. 50 as well other wise there will be a mismatch....

If still have any doubt, then pls ask.